Last year was so huge for us on learning how to budget and sticking to it. It was difficult at first but soon became actually easier because it forced me to plan ahead and do things in a timely fashion, like anticipating birthdays and gifts and purchasing and wrapping them ahead of time instead of rushing out last minute before a party.
Anyway, it was good and overall made a huge difference in our yearly spending, saving and tithing. I am super proud of us!!!
So in 2014 I wanted to stick with the plan, and step it up a notch by starting to use cash envelopes. The whole concept seemed overwhelming and undesirable at first because I never carry cash, and it would take some real planning and thinking to implement. Now that I am in the thick of it and have a system in place I really like it, and oddly have money left instead of less so I guess what they say about spending cash is true!
The first step was to figure out which transactions would be debited and which were cash. I chose envelopes for things like groceries,entertainment, misc, kids, etc and then things like bills are debited. ( gas is also debit card purchase bc paying cash for gas is a huge pain, especially if you have kids with you).
The next issue I had was worrying about having cash on me, what if I lost it etc so I broke up our budget into 4ths and replenish envelopes every Friday. The way my wallet is set up, I can easily take out an envelope before leaving the house instead of carrying it all around and worrying about it.
Record Keeping. I contemplated writing down where the money went like a transactions log but decided ultimately that was redundant. If all the money in the " grocery" envelope was gone then obvi I spent it on groceries so no need to record every detail. I am so tired of reconciling check books and also entering into budget software every day. It was too time consuming when I had a bajillion debit transactions and now that we only have a few debit transactions I can enter every 2 weeks or so very easily.
Step 4.) So what do you do about ordering things online? So glad you asked! ha I have an envelope in the back labeled " Deposit" which is where I put cash that I owe the bank account for online shopping. So if I order something from zulily, then I take that amount out of the "kids" envelope and stick it in the "Deposit" envelope.
So far this is really working for us and I love it. like LOVE it. It was complicated to set it up but it simplified things so much once I got it going.
- Last year I read Dave Ramsey Books to help understand and figure out how to properly budget, like what percentage to spend in certain categories and also what to save and why. It was very motivational. I used the Dave Ramsey gazelle software and my debit card.
This year I am using Cash Envelopes. The pictures you see are :
- a Filofax compact planner with
- day runner plastic envelopes
- Labeled with a label maker.
- DR Gazelle Software ( but barely)
I will admit that for some reason, I felt kinda awkward paying with cash for the 1st week. I don't know why, but I just felt silly. I had to remind myself that there was nothing to be embarrassed about using real, actual money. Cash ain't just for Gangstas!
Also FYI : After year 1 on the budget, I realized that I did not plan enough for Christmas shopping last year. This year I am now buying a gift card each month to set aside and use for gifts next year ( like for teachers and such).
This idea was adapted from THIS blog post!